Professional Responsibility Gillers Fall 2009

NYU School of Law Outline:

Professional Responsibility and the Regulation of

Lawyers, Stephen Gillers

Will Frank (Class of 2011)

Fall Semester, 2009

Contents

1 Introduction 2

2 The Attorney-Client Relationship 32.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.2 Entity Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.3 Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.4 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.5 Inform and Advise . . . . . . . . . . . . . . . . . . . . . . . . . . 82.6 Autonomy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3 Legal Fees 93.1 Contingency Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 93.2 Mandatory Pro Bono . . . . . . . . . . . . . . . . . . . . . . . . . 10

4 Concurrent Conflicts 104.1 Client-Lawyer Conflicts . . . . . . . . . . . . . . . . . . . . . . . 114.2 Client-Client Conflicts . . . . . . . . . . . . . . . . . . . . . . . . 12

4.2.1 Criminal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124.2.2 Civil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

4.3 Imputed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

5 Successive Conflicts 165.1 Private Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165.2 Laterals and Imputed Disqualification . . . . . . . . . . . . . . . 17

5.2.1 Government Lawyers . . . . . . . . . . . . . . . . . . . . . 18

6 Ethics in Advocacy 18

7 Prosecutors 20

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8 Negotiation and Transaction 21

9 Entity Representation 239.1 Who’s Your Client . . . . . . . . . . . . . . . . . . . . . . . . . . 239.2 Whistleblowing and Retaliation . . . . . . . . . . . . . . . . . . . 25

10 Controlling the Likelihood of Professional Failure 2510.1 Bar Admission . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2510.2 Transient Lawyers and Multijurisdictional Firms . . . . . . . . . 2510.3 Unauthorized Practice of Law . . . . . . . . . . . . . . . . . . . . 27

11 Remedies for Professional Failure 2711.1 Malpractice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2711.2 Women in the Law: Deborah Rhode . . . . . . . . . . . . . . . . 2911.3 Liability to Third Parties . . . . . . . . . . . . . . . . . . . . . . 29

12 Lay Participation 3012.1 Non-Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3012.2 For-Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

1 Introduction

• Legal ethics is a misnomer. Besides, there isn’t “legal ethics” anymore, it’s“The rules of professional conduct.” Really, it’s “the law of lawyering.”

• This is your second most important class, after whatever your practicearea is.

• The rules of the law of lawyering fall into two categories:

– Micro: governing an individual lawyer’s conduct in the representationof a client. Confidentiality, fiduciary duties, duties of the agencyrelationship, conflicts of interest, and duties to third parties.

– Macro: deals with the structure of the industry–selling a product, theproduct being information and judgment. In every jurisdiction exceptWashington, D.C., a person not a member of some jurisdictional barassociation cannot be an equity partner of a law firm, or manage afirm. (D.C. has a special setup; non-lawyers can have equity interest,as long as the lawyers control the nonlawyers and the business issimply to practice law.)

• Note how Big Media is dying, thanks to the Internet. And just like BigMedia, lawyers sell information.

• The Texas Bar Association went to Federal Court over Quicken FamilyLawyer, despite lawyers mostly doing routine work (Blumberg forms forco-op sales, for example).

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• So, things are changing. But knowing the rules is still the baseline.

• Notes: The ABA rules are “the dominant imprint on the rules governinglawyers.” They will be changed (in some states more than others–NewYork and California are the most altering) but they are the baseline. Ruleswill be marked in italics

2 The Attorney-Client Relationship

2.1 Confidentiality

• Rule 1.1: Lawyers must be competent. Really counts in malpractice ac-tions, but briefly touched upon here.

• Rule 1.6: (a): Lawyers shall not reveal information relating to the rep-resentation of a client without informed consent, implicit authorizationbecause it’s needed to represent the client, or because it’s permitted byparagraph (b).

• (b): Lawyers may reveal information if it’s necessary. . .

– To prevent death or substantial bodily harm.

– To prevent the client from commiting crime or fraud that will harmthe financial or property interests of others, and in furtherance ofwhich the client is using or has used the lawyer’s services.

– To get legal advice about the Rules.

– In a defense when the client sues the lawyer.

– To comply with law or court orders.

• Rule 1.0(e): “Informed consent” means agreement to a course of conductafter the lawyer has communicated adequate information and explanationof the material risks and the reasonable alternatives to the course.

• Perez v. Kirk & Carrigan: Perez drives a Coke truck, the brakes fail,and 21 children die. Perez is visited in the hospital by K&C, the bottler’slawyers. He gives them a statement, believing they’re his lawyers. Theyturn his statement over to the DA. He’s indicted, and acquitted, but suesthe lawyers.

– K&C have several defenses, which the judge shoots down:

∗ “He wasn’t our client.” The judge answers that there was animplied attorney-client relationship, because a reasonable per-son, seeing two lawyers saying “the bottler hired us, and we’relawyers” to the driver would think they were hired to defendthe driver too. They could have been specific–“we represent thebottler, not you”–but they didn’t.

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∗ “There were strangers present, so there is no privilege, and thenno obligation.” Judge: “There is a difference between confiden-tiality and privilege.” Even if there wasn’t a privilege shield,there were still ethical obligations.

– The ethical obligation differs from privilege. First, as in Perez, theinformation may not be privileged because of third-parties. But still,the duty of confidentiality can attach.

– Privilege is a shield against forced disclosure. Confidentiality is nota shield, it’s an obligation not to voluntarily reveal.

– Rule 1.18 outlines duties to prospective clients–so a potential clientcan shop around.

– NOTE; The violation of the ethics rules was not the theory of liability.The ethics rules do not create a cause of action.

– The liability was the violation of the law of fiduciary duty, whichcaused emotional distress.

• “My Client is HIV Positive”: Your client tells you he’s HIV positive, andhe’s having sex (possibly not protected) with your former client, the onewho’s paying bail and legal fees, but doesn’t want her to know.

– Recall Rule 1.6(b)(1): Revealing information is allowed to preventreasonably certain death or substantial bodily harm.

– Is this confidential, because it’s relating to representation? Yes. Itwas told to aid in a bail application. It’s also privileged, from clientto lawyer.

– The lawyer can’t decide what is legally relevant and what isn’t. Theissue is factual relevance from the layperson’s perspective.

– Being paid by Anna to represent Ken does not make Anna your client,anyway.

– What about this: the client is “not the cautious type,” but how doyou know?

– Most lawyers will not reveal, in tests done by Gillers.

• “All’s Not Well”: Ben represents the Winklers in selling a home, but thenlearns about the “well problem.”

– Is this confidential? The Winklers are not clients. But then, “relatingto the representation” is not temporal.

– Perhaps Ben should talk to the Winklers and make sure it wasn’tthat Copeland Engineering sent the wrong file. (But they probablywasn’t. Let’s assume the Winklers pulled a fast one.)

– Are or were the Winklers guilty of fraud? Rule 1.6(b)(2) and (3)require the conduct that may or has resulted in injury be a crime orfraud.

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– We need to examine the substantive law.

– Practically speaking, the incentive structure says to reveal. Beingsued for assisting a fraud is even worse than the client reveal.

• Logan Alton: Lawyers knew for twenty-five years that Alton was innocentbut couldn’t talk.

– The lawyers also claim that the DA was committed to a “Logan didit” theory.

2.2 Entity Clients

• Rule 1.13 discusses entity clients, like corporations and companies. They’reentitled to the same representation and protections as a biological client.That said, there’s no direct communication with a lawyer–the constituents,who the lawyer might or might not be able to represent personally, com-municate.

• There are two typical justifications for protection rules: normative (re-spect the integrity and autonomy of the person) and empirical (encouragecandidness with the lawyer). Neither applies here.

• Rule 1.13(f) requires that a lawyer, when dealing with the constituent of acorporate client, explain the difference between a corporate client and theconstituent. This is a sort of “corporate Miranda warning.”

• Of course, if you warn a constituent, he or she might clam up.

• There are various tests outlined for determining who qualifies as part ofthe privilege:

– “Control group” test (Upjohn at the Sixth Circuit, overturned onappeal).

– Upjohn: “Scope of the duties” test.

– Samaritan Foundation: “Mere witness” test.

– Restatement: “Between an agent of the organization and the lawyer(or lawyer’s agent) and concerning a legal matter.”

• Upjohn v. United States: Company investigates bribery of foreign au-thorities. Corporate counsel talks to all levels of employee–workers, lowmanagement, line management, senior management. IRS subpoenas therecords, and company claims privilege.

– The Sixth Circuit set up a “control group” test: only those “officersand agents responsible for directing the company” are protected.

– The Supreme Court rejected that test, saying that if counsel’s con-versation concerned “matters within the scope of the duties of theemployee,” the conversation is privileged to the company.

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– The Court says that the government is not without options. Facts areprivileged–the IRS can interview the same people the general counseldid. (It didn’t touch on the fact that there’s no way those employeeswould be candid.)

• Of course, the “scope of the duties” test is binding to federal cases. Butstates, ah.

• Samaritan Foundation: Arizona state statute. Medical malpractice case,with various nurses and orderlies interviewed as part of the investigation.None of those were charged with negligence in their own rights, just thedoctors. Plaintiff in malpractice suit subpoenas the hospital lawyers’ notesfrom the interviews with the nurses and orderlies.

– The Arizona Supreme Court concludes that if the lawyers initiatedthe communication, and if the facts “concern[] the employee’s ownconduct within the scope of his or her employment” it’s privileged.

– However, it excluded communications from those who were “merewitnesses” (and just happened to be employees).

– So in the case at bar, the interview notes were not privileged.

• The Restatement is about as broad as it can get, being the sort of extremeend of Upjohn.

• “Slip and Fall”: Someone slips in a department store. Seven people areinterviewed.

– The Parties

∗ Walton: Plaintiff.

∗ Lundquist: Lawyer for plaintiff.

∗ Tracy’s: Defendant department store.

∗ Parr: Assistant GC for defendant.

– The Tests

∗ “Control Group”

∗ Upjohn

∗ Samaritan Foundation

∗ Restatement

– Todd: Investigator, agent of Parr.

∗ As Parr’s agent, the privilege applies as if Todd was the lawyerhimself. Nothing doing from that end.

– Burkow: Head of maintenance.

∗ “Control Group”: Maybe, maybe not. Up to the defendant,claiming privilege, to establish.

∗ Upjohn: Yeah, as maintenance is within the scope of the duties.

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∗ Samaritan Foundation: Probably, as it was related to the em-ployment.

∗ Restatement: Absolutely.

– Morse: Floor waxer.

∗ “Control Group”: No way.

∗ Upjohn: Yeah. Waxing being within the corporate duties.

∗ Samaritan Foundation: Definitely. Here, it’s the same as Up-john.

∗ Restatement: Absolutely.

– Sandstrom: Salesperson who was on break.

– McCormick: Buyer for the rug department, in the store on his dayoff.

∗ “Control Group”: Not a chance.

∗ Upjohn: Maybe. They’re employees interviewed so that the com-pany can get advice.

∗ Samaritan Foundation: No. This is the exact situation in Samar-itan.

∗ Restatement: Yeah, probably.

– Corcoran: Former employee who had established the waxing proto-col.

∗ There could be a vicarious liability issue, if she mis-establishedthe protocol or some such. But probably a bit of a longshot.

– Rivera: President of the company that supplies the wax.

– Kuhl: Customer shopping in the store.

∗ These are not employees, so nothing protects. But a clever lawyermight say that Upjohn’s scope test covered wax in general, andso roped in Rivera. Long shot though.

– Note that Moore might think “if I tell Todd the truth that I over-waxed, and it’s not privileged, that’ll make the company liable andthreaten my job. But if it’s privileged I can tell the truth.”

– That’s what the whole point of the debate is.

• The courts have suggested that bad purpose–retaining a lawyer to advancea crime or fraud, for example–can undo privilege.

• But when the other side alleges bad purpose, and that there’s no privi-lege. . . how do we make the pre-trial determination whether to release thecommunications on the basis of bad purpose?

• There is a secondary burden in some courts (including the Second) toprove the crime-or-fraud argument: the opponent of privilege must showreasonable cause to believe that the purpose of the communication withthe lawyer was in furtherance of a crime or fraud.

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2.3 Agency

• The law can bind the lawyer to the client, and make the client responsiblefor the lawyer’s conduct. See Taylor v. Illinois (if your lawyer willfullyfails to reveal a witness’s identity, your Sixth Amendment rights haven’tbeen violated) and S.E.C. v. McNulty (A sophisticated client should bediligent in communicating with his lawyer).

• Your remedy may be to sue your lawyer, but you don’t escape the initiallawsuit.

2.4 Fiduciary Duty

• This isn’t arm’s length. Once you create an A-C relationship, you have totreat the client as your friend.

• Your interests don’t count. Just your client’s.

• If your interests interfere, you can’t take the case.

• If the interests of other clients interfere, you shouldn’t have the case either.

2.5 Inform and Advise

• Nichols v. Keller : A man injured on the job goes to a worker’s compen-sation lawyer and says he got hurt. They don’t tell him he also has a tortclaim, and then the statute runs out.

– The court says that the lawyers should have advised him about thetort claim, and said he had to go elsewhere for it.

– California has even extended that logic to lawyers certified to repre-sent a class–they have to consider other theories of liability even ifthey won on the first one.

• “In a Box”: Font & Blue knows something about Endicott, the about-to-be business partner of client Marsh. What can the laywer say?

– He can’t tell Marsh without mentioning Font & Blue.

– He should get consent.

– The firm probably can’t represent Marsh anymore.

– They can’t just not tell the partner working for Marsh–knowledge ofone lawyer imputes the firm, and besides, the lawyer has met withMarsh and helped out.

• A recent case actually had a situation like this–the lawyer didn’t say any-thing.

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• There is no excuse of a duty to inform based on proximate cause–we can’tspeculate on whether another lawyer would have the information, we haveto inform what we have.

• Note also that giving percentages can be misleading.

2.6 Autonomy

• The rule used to be that the client handles ends, and the lawyer handlesmeans. That’s changed.

• “Ms. Niceperson”: The lawyer has a client to consider, and the opponentlawyer is about to screw up. She probably does need to tell her client–orat least maybe undo the comfort level given to the opponent? This onegot a lot of pushback from lawyers on CLE.

• “Memo from GC”: Is it serving the interests of the client to focus ondiversity rather than quality?

• “Accept the Offer”: Options include bringing in a financial advisor, askingfor a provisional agreement to make sure this is worked out, and then, asa nuke, withdrawing.

• Jones v. Barnes: Does defense counsel assigned to prosecute an appealhave a constitutional duty to raise every single issue the defendant asksto raise?

– Court: Nope. That would be second-guessing.

– Note–this is probably wrong. Barnes did have the final call. But didthat screwup rise to the level of a Constiutional violation?

• Olfe v. Gordon: The obligation to tell the client can be grounded in bothtort and contract. And screwing up means the lawyer can be liable.

• Keep in mind Rule 1.2(a): The lawyer abides by the client’s decisionsconcerning the objectives of representation, and consults with the clientfor the means.

• Also, Rule 1.4(a)(2)-(3): The lawyer consults with the client about themeans and keeps the client informed.

• Finally, Rule 1.4(b): The lawyer explains a matter to the extent necessaryto allow the client to make informed decisions.

3 Legal Fees

3.1 Contingency Fees

• The average person doesn’t exactly “shop around” for lawyers. As a con-sequence, states adopted rules to protect clients regarding fees.

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• The most common rule is a cap on the amount of a contingent fee inpersonal injury cases.

• Commonly, the rule is that the maximum amount a lawyer can ask for is1/3 of the recovery.

• Brickman, O’Connell, and Horowitz have argued that this structure is notfair to the client; there should be a lower cap on “first money,” becausethat didn’t involve work on the lawyer’s part.

• Sometimes, a defendant makes an offer right away, or after just a littlework, after all.

• The proposal:

– When the plaintiff hires you, you have 90 days to make a demand tothe defendant.

– If you don’t get a response within those 90 days, you continue asnormal.

– If you do get an offer within those 90 days, and the client accepts,your contingency fee is no more than 15%.

– This is designed to cap contingency fees on first offers more, com-mensurate with the less work the lawyer would have done.

• Argument: This will make plaintiffs’ firms go out of business. Counter-argument: Plaintiffs’ lawyers have an interest in early settlement, so theper-hour compensation in settling is higher for early settlements.

• The proposal died in California and stayed that way.

3.2 Mandatory Pro Bono

• Rule 6.1: A lawyer should aspire to render at least 50 hours of pro bonowork annually.

• Lawyers have a monopoly, after all.

• However, the best the rule can do is aspirational. Anything stronger failsto pass.

• The alternative is to file a document with the court–so this is a rule ofshame.

4 Concurrent Conflicts

• We will encounter conflict problems. At the very least, office, colleague,adversary lawyers, if not our own.

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• They are highly technical, and often have no mens rea requirements.

• But while they are highly technical, they’re also the closest legal require-ments come to literary analysis.

4.1 Client-Lawyer Conflicts

• Rule 1.7: A lawyer shall not represent a client the representation involvesa concurrent conflict of interest, as defined by the representation beingdirectly adverse or by a significant risk that the representation will be ma-terially limited by other responsibilities.

• This is a default rule. It can be overcome by four factors together: rea-sonable belief that competence and diligence are possible, no other legalprohibition, no actual representation of both sides of a matter, and in-formed consent in writing.

• “Lawyer, Realtor”: This imputes the “significant risk” factor–you’re try-ing to get a better deal for both sides. A jury will be asked to find apossibility of divided focus. Can you really advise one side to walk away?

• Note that there can be a violation without an actual problem.

• This is a policy judgment–the temptation is too great in some cases thatwe don’t want the lawyer to even run the risk.

• Another interest being served is client comfort, candor, and reliance onthe lawyer. If we had too much conflict permissibility, clients might bemore circumspect.

• Matter of Neville: Neville represented broker Bly in other matters, andthen purchased options in Bly’s properties. Then, he wrote a contractinvolving Bly, Neville, and another party and a land swap deal.

– Rule 1.8(a): You can’t enter a business transaction with a client, orknowingly acquire ownership or interest adverse to a client, unlessthe transaction and terms are fair and clearly disclosed in writing,the client is advised to seek independent counsel and given time to,and the client gives informed consent.

– This rule has both substantive (“fair and reasonable”) and a pro-cedural (“disclosed in a manner reasonably understood, advised inwriting of the desirability of independent counsel, &c.) obligations.

– Here, the Arizona Supreme Court found that Neville hadn’t giventhe full disclosure necessary. He was censured.

– The lawyer looks to the client as a guardian–and the lawyer has accessto the client’s confidential information that other negotiators mightnot.

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– Neville claimed to just be a stenographer, but the Court said that noreasonable lawyer would have advised a client to accept the terms.

• Conflict rules are default rules: the regime the lawyer lives under withouta separate agreement, with informed consent and in writing, from theclient.

• Fla. Bar v. St. Louis: While representing claimants against DuPont for$59m, his firm accepted more than $6m to represent them. Disbarred. Itdoesn’t matter what you were thinking, it matters what happened andwhat the client was aware of.

• Hager : Same situation–leading to a year’s suspension.

• US v. Hausmann: A kickback scheme with a chiropracter (going-rate feeswith 20% to Hausmann) led to indictment for mail fraud–using the mailto deprive clients of his honest services in violation of the fiduciary dutyto clients.

• “Lawyer’s Firm Is Occasional Client”: Probably not a Rule 1.7(a)(1) prob-lem. There is no matter pending. And besides, we’re not adverse to ourclient, just their client.

• But at the same time, there’s an (a)(2) problem: you can’t move forsanctions, for example, against your own client! And there may be adanger from the other side of antagonizing your malpractice lawyer.

4.2 Client-Client Conflicts

4.2.1 Criminal

• The Sixth Amendment right to counsel means unconflicted counsel.

• “Murder One, Murder Two”: There’s probably a conflict. Another lawyercould, for example, move to sever trials. But is there a Sixth Amendmentclaim of ineffective assistance of counsel?

• The Strickland test concerned lawyer intent/prejudice, not conflict.

• Cuyler asked for a showing of not just conflict of interest, but also actualadverse effect.

• On the other hand, Holloway said that a trial judge must investigateclaims of an actual conflict of interest when they’re brought to his at-tention, or convictions get reversed. This is keeping the trial judges inline, a different scenario.

• And Mickens dealt with Saunders, who had been appointed to representHall and then to represent his murderer. Saunders didn’t raise the objec-tion, so the Holloway rule didn’t apply.

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• The Mickens dicta suggests that interests between current clients aren’tthe same as between current and former clients. It’s dicta because it’s clearthis wouldn’t have satisfied the Cuyler actual-adverse-effect test anyway.

• Wheat suggests that sometimes, it’s not possible for there to be “fullyinformed waiver,” and district courts get broad latitude in determiningwhether to accept a waiver of conflict.

• “Murder at the Ballgame”: If Pontero, the client, can show that Lydiacouldn’t do what an unconflicted lawyer arguably could (such as the “Pete-did-it” defense), that’s the Cuyler test for actual adverse effect.

• On the other hand, if Chen made the motion and won, he might face aGonzalez-Lopez problem. The removal of the attorney of choice, if foundto be a Sixth Amendment violation, triggers automatic reversal.

• There’s no way to show how there would be a difference–so the right isviolated when counsel is denied. It’s not fairness, it’s choice.

• Lydia could get a writing from Pontero, and likewise get an independentlawyer.

• Note that in Wheat, the bar for conflict was low, but the short time wasa factor. And the other safeguard was that Iredale would be added to theteam, not necessarily a total substitution.

4.2.2 Civil

• “Will You Represent Us Both”: Two minorities passed over for promotion?If the remedy is the job, definitely not. Research the substantive law,determine what the remedy would be.

• And maybe take the job off the table: Rule 1.2(c) allows a lawyer to limitthe scope of representation. Say flat out that you won’t advocate for thejob, but you can do the rest!

• Fiandaca v. Cunningham: The Fiandaca Class (represented by NHLA)claimed it was denied equal facilities (of prisons). Meanwhile, the GarrityClass (NHLA’s again) complained of the conditions at Laconia. When thestate offered Laconia to the Fiandaca, NHLA rejected the offer, and NewHampshire claimed conflict.

– The classes were not opposed, so this must be Rule 1.7(a)(2).

– In lay terms, if NHLA wasn’t representing Garrity, it could havegiven objective advice about whether Laconia was a good deal. Butit couldn’t.

– The Circuit found that the conflict didn’t affect the verdict, but itdid affect the remedy. So the remedy gets vacated.

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4.3 Imputed

• Note that in Fiandaca no matter how big NHLA is, Rule 1.10: Clientconflict is imputed to every lawyer in a firm. (But personal conflict isnot.)

• If you’re across the table from a party your firm represents, even if it’sa whole other lawyer in the firm and the matters are unrelated, that’s aviolation.

• Informed consent displaces the rules (Wheat doesn’t apply outside of crim-inal cases because of the Sixth Amendment factor), so the onus is on thelawyer.

• Rule 1.10(a) might not apply to every Of Counsel in a firm, but certainlyevery full-timer, partner and associate, regardless of office.

• Does it still make sense, given the size of firms?

• The Calderon v. Micro hypothetical: Schmidt is doing Calderon’s estateplan, while Mickeljohn is handling a zoning matter for Micro. Calderonand Micro are in litigation.

1. If neither Schmidt nor Mickeljohn is working on the actual dispute,that’s fine.

2. If Schmidt is representing Calderon in the dispute, that’s a problem–it’s a Rule 1.7(a)(1) violation requiring informed consent. (The “un-related matters” scenario.)

– The justification here is that Schmidt might have ulterior motivesand might pull his punches on Micro.

– In addition, Micro might not trust Mickeljohn fully–reduced trustand openness. “Who are you, my friend or my enemy? Whatside are you on?”

3. If 2, and Mickeljohn’s work in the zoning matter is related to theCalderon dispute, that’s related matters. Probably not going to getconsent anyway, but it might not even be possible. Same fears asabove, plus direct fear of information getting back to Calderon.

• By the way, an important point: A rule common in many jurisdictionssays that when two clients (say, defendants) and their two separate lawyersconfer among themselves, this does not sacrifice attorney-client privilege.

• Normally, third parties break privilege, but codefendants and their lawyershave a common interest, that protects the privilege–or, accurately, pro-tects what would otherwise not be protected because of the loss of theprivilege.

• It’s called “joint defense privilege,” but it’s not actually a privilege.

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• It’s not just defendants, either. Plaintiffs, prospective parties, even insome cases transactional clients.

• Waiving that can be tricky. California says you can only waive privilegeon what you, yourself, said, not what someone else said.

• The arrangement need not be in a writing, but should, outlining who cansay what and how it can be waived.

• In some cases, several circuits–Third, Ninth–have found, absent a dis-claimer, a fiduciary relationship between lawyer A and client B.

• Simpson v. James: The same firm who was handling the sale of a cat-fish restaurant franchise was advising the investors about an insurancemess. . . and when asked to restructure the promissory note after somebankruptcy, the firm said they were working for the investors.

– The court lays out the elements of malpractice: negligence, proximatecause, &c.

– Oliver and James represented both sides–so they couldn’t get bothof them the best deal possible.

– James tried to claim Simpson was never his client, but nobody buysthat.

– Conflict rules deal with risk avoidance and minimization. But howdoes a conflict become liability? Isn’t that a distinct issue?

– Yes. Here, this was negligence, which Simpson argued arose out ofthe conflict of interest. The conflict led to neglecting duty, which wasnegligence.

– Dueling experts can suggest that the lawyers were restricted, anddidn’t do (or think of doing) some things they should have tried.Such as attaching the insurance proceeds from the fire.

– Moreover, there needs to be causation–the jury here found that if anunconflicted lawyer had tried to get what Oliver and James didn’t,that lawyer would have succeeded. That’s a high bar, but it happenedhere.

– If Oliver had gotten everything Simpson wanted, there couldn’t havebeen malpractice. The bar association might have had some harshwords, though.

– The violation of the conflict rule frames the behavior of the lawyersin context, and allows Simpson to argue for a certain state of mind.

– There are other remedies, such as disbarment or forfeit of fee.

• “They’re on the Same Page”: The money, the contacts, and the manager.All are on board. Why do they need three lawyers?

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• Issues include: Equal ownership? Who helps whom? What if people wantsalaries?

• Penelope can’t resolve the differences. But she might become a scrivener:lay out the options and issues, tell them what the problems are, draft thelanguage. . . and prepare informed consent forms.

• There are categories of conflicts. In Calderon, Micro might be willing toagree about adversity “concerning unrelated matters, not involving litiga-tion.”

• Consent need not be to a single particular conflict. Large firms often say“we’ll take you as a client, but you must agree that we may be adverse toyou in any unrelated, non-litigation matter where the lawyers adverse toyou are not representing you.”

• Rule 1.7(b) says that almost anything can be waived with informed consent,confirmed in writing, except active P vs. D situations. You can’t representboth sides of a courtroom, period.

5 Successive Conflicts

5.1 Private Practice

• Rule 1.9(a): A lawyer who has formerly represented a client in a mattershall not thereafter represent another in the same or similar matter inwhich the former client’s interests are materially adverse without informedconsent in writing.

• Analytica, Inc. v. NPD : NPD hired S&F to handle a financial transaction,and the employee in question quit, formed his own company, and hiredS&F to sue NPD on financial matters.

– A substantial relationship is defined by “he could have obtained con-fidential information in issue 1 that is relevant to issue 2.”

– The rule is not “did” but “could have.”

– The same relevant information means substantially related.

– The judges don’t look through files, so the best that can be done isthe guesswork.

• “Divorce and Default”: Slipshod is not Patrick, and Wumco is not Lilahor Patrick. The opposition here is to Slipshod, not the former client. Atthe same time, the same interests are in the negotiation. So that’s that.

• “Do I Still Owe the Record Store?”: Well, she could have obtained confi-dential information about the noise and the lease. Who knows about thezoning. Maybe on the competitor.

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• Former clients get less protection than current clients. You may not beadverse to a current client on any matter. But you may be adverse to aformer client on an unrelated matter.

• There is a “hot potato” rule: you can’t drop a client (turn them fromcurrent to former) just to avoid a conflict (by taking an unrelated claimagainst the client).

• But there is also a “thrust upon” exception. If the conflict arose not dueto the law firm (mergers and acquisitions, or operation of law), the firmcan drop one of the clients or get consent.

• Note Rule 1.9(c) mimics responsibilities to current clients in Rule 1.6(a)and 1.8(b): you shall not us information relating to the representation ofa former client to the disadvantage of that client, except as you could toa current client or if the information is generally known, and you shallnot reveal information relating to a former client except as you could to acurrent client.

5.2 Laterals and Imputed Disqualification

• Even summerers have a possible conflict of interest.

• In a firm with no laterals, conflicts are imputed.

• But do we impute a lateral lawyer’s personal conflicts and client conflictsto the new firm?

• An early Second Circuit case said that when a lateral left, if she hadn’tever worked on a matter, she shedded the conflict. But if she has workedon it?

• “You Don’t Know Anything”: Lakoff worked on the defens of AxiMartinin the two age discrimination cases–is that substantially related to the sexdiscrimination case?

• An argument has been made that anything the lawyer learned would belearned in discovery anyway, but that got shot down on “you have a head-start” grounds.

• There is also a “playbook doctrine” suggesting that if you spent twentyyears developing a strategy for, say, ERISA cases, you can’t attack thecompany on ERISA doctrine. There are two underlying presumptions(which are rebuttable) in the lateral-lawyer doctrine, at least in somecircuits (such as Illinois/the 7th Circuit):

1. The lateral lawyer did have access to confidential information. (Re-buttable through a showing that she never learned anything, timerecords showing she never worked on the matter, &c.)

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2. The lateral lawyer will share confidences with the new firm. (Inthe Seventh Circuit, at least, this is rebuttable with a showing ofproper screening–emails saying “don’t discuss,” passwords and locks,partners’ discussions, protections against milling about and generalgossip.)

• “Can We Hire Taylor Monk?” New York’s Kassis rule is trickier thanIllinois’s. “You can screen, without informed consent required, when thelateral’s information is unlikely to be significant or material.” And wedefine that. . . how?

5.2.1 Government Lawyers

• “Investigating Landlords”: Rule 1.11: Lawyers who leave government ser-vice have different issues. Less now, since across-the-board screening ispossible under ABA rules at least, but still problematic. First, they aresubject to 1.9(c) about information reveal, and second, may not representa client in a matter in which the lawyer participated personally withoutagency consent.

• Rule 1.11(b): The firms are out too, unless the former-government lawyeris screened and written notice is given to the agency.

• But drafting a law is not deemed a matter under Rule 1.11.

• So, Cynthia obviously can’t sue a landlord that she subpoenaed, but anythat she didn’t are fair game.

• As to defending the landlord, she can probably do that. We excludedrafting a generic rule from the definition of “matter” in Rule 1.11.

• Danger zones are everywhere–the standard for conflicts is strict liability,at least as far as the bar is concerned.

6 Ethics in Advocacy

• Prosecutors don’t ask about the adversary system and its benefits andfailures. They’re too invested.

• Trollope, Rifkind, Frankel, Post–how adversarial is it?

• “Which system is better,” adversarial or cooperative?

• Adversarial: More money, ceteris paribus, wins.

• Cooperative: The facts are public. You can discuss what they mean, butthe facts themselves are public.

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• Problems with the cooperative system: Less investigation, lawyers willwant to be less informed about the client (so they have less to turn over),clients might be afraid to talk to their lawyer.

• The clients will hold back–which might make it their own fault.

• And what about snowing the other side under with documents?

• The side that thinks the facts are on its side might not investigate, becauseat best it’ll be in the same position and at worst it’ll be worse off.

• In an adversarial system, we lawyers have more to sell, and the publicmight get less than it would want if it was fully informed.

• Rule 3.3: A lawyer may not knowingly make a false statement of fact orlaw, fail to correct same, fail do disclose controlling, directly adverse legalauthority, or offer false evidence, to a tribunal.

• Judges frequently read out the ”controlling, directly adverse” part of thelegal authority rule.

• Note that lawyers are required to take reasonable remedial measures, upto, if necessary, disclosure to the tribunal.

• Rule 1.11(b): If a lawyer knows that a person is, has been, or will beengaging in criminal or fraudulent conduct, of any sort, he must takeremedial measures.

• These duties continue until the end of the proceedings–the trial and allappeals. Then they’re gone. Except in New York, where a rush job ofdrafting left out the temporal limitation.

• Nix v. Whiteside: Client indicates he’s about to say he saw a gun, whenhe didn’t. Lawyer threatens to withdraw from representation if clientgoes through with it; client backs down, is convicted, and claims a SixthAmendment violation.

• The threat to withdraw is not a violation: there is no Sixth Amendmentright to lie on the stand.

• “Out Carousing with Mikey”: What can the lawyer do? Tell the jury anew story: “OK, so it wasn’t Mikey that Carlo was drinking with, but hewas drinking! His memory’s hazy, he can’t recall who. Mikey will testifythat Carlo goes out drinking a lot.” Is that enough?

• There are limitations to not learning everything–you can’t raise justifica-tion if you never asked “did you do it?” And savvy clients will lie to theirlawyers.

• The Anatomy of a Murder “Lecture”: did Biegler act properly?

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• “Did you communicate?” Can the lawyer stay quiet? Has the clientperjured?

• “The Eyewitness”: Can you argue that the jury should find, as true, factsthat you know are false?

• The Subin/Mitchell debate: “monitor” versus “advocate.” Subin objectsto a “false defense,” but Mitchell argues about the line. The ChristmasTree Star example is a good one.

• The defense lawyer’s hands being tied might encourage prosecutorial sloppiness–no need to make a bulletproof case. This is certainly bad.

• The Walser Issue: Defendant moves for SJ, response due on 5/5, asks forextension on 5/4 and gets response of “no, submit forthwith” on 5/10. Is5/22 “forthwith”? Walser briefs the “immediately, without delay, prompt,and with reasonable dispatch” language in McAllister, but leaves out theDickerman 24-hours figure it cites, leaves out the indication of emphasis,and removes the “as used in the SAA” qualifier.

• She gets sanctioned under Rule 11.

• “Maxwell’s Silver-Handled .38”: If the defense lawyer has the burden onthe issue of self-defense, and can only allude because it wasn’t clear? Now,it’s not just punching holes in the prosecution’s true evidence by alludingto falsehood, it’s asking the jury to affirmatively find what we know isfalse.

• The Collaborative Law movement, to solve these problems, arose in di-vorce law. Desperately needed.

7 Prosecutors

• “Anita Winslow”: Is it legitimate to charge Anita to the max in hopesthat months in jail will “soften her up”? Yeah, probably.

• Daniel Bibb: What can or should a prosecutor do?

– He had options–resign, refuse, “throw the case”?

– Bibb: “No such thing as a factfinding hearing.”

– Bibb turned over everything he had, and pointed out the good stuffto them.

– It’s commonplace for prosecutors to advocate hard for the guilt, butnot on the sentencing factor.

– Bibb insists that any withdrawal would have been quite noisy indeed.

• Does Bibb’s defense depend on whether he was right?

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8 Negotiation and Transaction

• Rule 4.1: A lawyer may not make a false statement of material fact orlaw to third parties, and must disclose do third parties a material fact inorder to avoid assisting a fraudulent or criminal act.

• What does a lawyer do when he learns in negotiation that a client hasengaged in such conduct?

• Threshold question for Rule 4.1(b): Does the conduct actively assist thefraud? Check the substantive law.

• Under Rule 1.6(b)(2), the crime or fraud has happened. But (3), the“avoid substantial injury” issue, that might cover it.

• “Noisy Withdrawal”: OPM case. Lawyers for a midsize firm learned theirclients were lying about collateral in bank loans. They withdrew silentlyfrom the case and got sued.

• New York changed the rules to allow not revealing what you know, butwithdrawing and taking back what you said: “I can’t say why, but I takeback my statements.”

• What about the client suing for breach of fiduciary duty? Could the clientsay that yes, it was a contract breach, but it was not fraud?

• “Bad Client’s Good Lawyer”: Maybe the plan isn’t to sue to win, but sueto get a settlement and insurance.

• “Complex Formula”: Discrepancy made by wife’s lawyer. May, or must,there be a correction?

• Sumerel : The Court reformed the contract, saying it wasn’t an offer ca-pable of acceptance.

• Could the husband’s lawyer come back and say “We agree on the number,but won’t discuss the formula”?

• From the list on p. 511, what’s false?

A The quintessential puffery.

B Same as A.

C Talk about what is, not what will, may, or could be.

D Same as C.

E Same as A.

F Same as C.

• Fire Insurance Exchange v. Bell : Said the policy limit was $100,000, whenit was thrice that.

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– Bell claimed that the plaintiff and lawyer had no right to rely on theopposing lawyer’s assertion of facts.

– That got thrown out. There needs to be reliance on what lawyerssay.

• Hoyt : A lawyer presents as true a fact that he knows is not true based onhis knowledge.

– Hoyt: “I don’t know any way to pierce the corporate veil, do you?”Lawyer: “There isn’t any way.”

– The lawyers claimed this was an opinion of law, not fact.

– Court found for Hoyt, because this wasn’t pure law, as in, “this casemeans X.”

– This was mixed fact and law, and imputed facts. Even if the lawyerdidn’t know the facts, he pretended to, and purported to assert them.

• Virzi : Plaintiff died, would have been a good witness, and lawyer doesn’ttell.

– Normally, there is no affirmative duty to tell the other side abouttheir misapprehension. You can’t create the misapprehension, butyou don’t have to correct one they got themselves.

– But there is a special affirmative duty to report the death of theclient to both the opposition and the court.

• Spaulding v. Zimmerman: Defendants find a problem related to the acci-dent and settle right quick. Judge reopens the settlement, because it hadto be court-approved.

• The cases on p. 520 (lawyers without facts, outside math error, &c.) arenot necessarily consistent.

• The underlying theme seems to be not exploiting falsity.

• Mere nondisclosure to an adverse party and a court of facts does notappear to constitute fraud on the court.

• In a criminal case, though, a guilty plea where the victim has died ofunrelated causes gets no dice. There is no duty to inform the defendantabout the death of a nonlitigant.

• Threatening criminal prosecution to get money is a form of extortion. Butthreatening to report a civil harm is not extortion, at least not in NewYork.

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9 Entity Representation

9.1 Who’s Your Client

• Lawyers for organizations are not necessarily lawyers for the organization’scontrollers. But the controllers do control the lawyer.

• Rule 1.13: The lawyer represents the organization acting through its con-stituents.

• Some scenarios on p. 530:

– Business decisions are not within the lawyer’s responsibility.

– Legal dimensions, you must at least speak up about. There is nolegitimate interest in violating the law.

– And if the constituents steal from the entity, well, the duty is to theentity, not the constituents.

• Rule 1.13(b) creates a mandatory duty to act as “is reasonably necessary”to protect the organization’s best interest. The lawyer must refer the matterall the way up to the top, if necessary–Board of Trustees/Directors.

• That was passed to quiet the SEC.

• Sarbanes-Oxley also imposed complicated duties on lawyers.

• Tekni-Plex : Understand this, and you understand the issue.

– When you sell a business, and the rights, titles, and obligations, yousell the “incidents” of the sold business’s attorney-client relationshipwith its lawyers. Whatever those are–loyalty (1.9), confidentiality(1.9(a))–whatever was owed to the seller before the sale is completed,it’s owed to the buyer. The buyer is the former client.

– So is the matter in Tekni-Plex substantially related? Is that prongof 1.9 active?

– Is the “former client” a former client concerning the warranty of thefinancials?

– The claim is that the duties owed in a situation not adversarial toCortina transferred to Cortina, but at the buy-sell, Cortina had noexpectation it was acquiring the firm’s active duties to the seller atthe time it bought the property.

– Chief Judge Kaye says there’s a good reason we don’t transfer to thebuyer the incidents of the A-C relationship arising out of the mergeritself. The seller would have no confidence of confidentiality.

– The upshot: duties owed during the merger negotiations do not trans-fer. But other matters do.

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• Now, what tends to happen is a market: “We’ll sell you everything butthe privilege.” “OK, but we want a discount.”

• So, if you were the buyer, and you didn’t want to exclude the privilege,what would you want from the firm? The files. Everything the firm did.

• You also don’t want there claim that the constituent thought he was yourclient. Hence, Upjohn warnings (such as in In re Grand Jury Subpoena,but better phrased than the troublesome ones there).

• The higher-up a constituent, the less plausible the “I thought they weremy lawyer!” claim.

• Murphy & Demory : Bench opinion. Firm sued was Pillsbury. The lawyerwhose conduct contributed to the problem had written a book on legalethics. And the court outlined (on p. 562) thirteen ways Pillsbury violatedits duties!

– The lawyers helped a shareholder steal business from the client.

– And a junior associate had sent emails asking if this was OK.

– And oddly, Pillsbury didn’t settle.

• Another problem for law firms: Let’s say you represent a corporate parent.Do you represent all the children? And who controls the privilege–such asfor internal investigations?

• Early on, there was no automatic equivalence, but the ABA came up witha list of when equivalence would/should be found:

– By express or implied agreement.

– By receipt of confidential information (such as would result fromantitrust, securities, or contracts).

– By companies operating as alter egos (no corporate formalities–onecompany. Rare).

– By integrated operations, management, and counsel–same email, samepersonnel, same building (different from alter egos because there areseparate books and other corporate formalities).

– Possibly, when adversity to a nonclient member would economic harmto another momber (such as the parent); if you represent Parent,and someone asks you to bring an action against Subsidiary, but theaction is so big that Parent would be economically harmed.

• That last one is controversial.

• Lawfirms will try to hedge with retainer agreements and waivers, but it’sunsure whether courts will buy that.

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9.2 Whistleblowing and Retaliation

• “Contraindications”: The GC believes this to be a judgment call.

• Balla v. Gambro: Illinois Supreme Court denied a claim of retaliatorydischarge because it was a lawyer. California, though, recognized one alittle later.

10 Controlling the Likelihood of Professional Fail-ure

10.1 Bar Admission

• Durational residency requirements for bar admission are gone, but resi-dency itself is still possible.

• Griffiths v. Connecticut : The State cannot forbid a legal immigrant whois not a citizen from taking the bar.

• The EU has practically destroyed the distinctions between lawyers in coun-tries (which can have different legal systems entirely!) but we have thembetween states.

• There are, though, waive-ins. Some.

• Stephen Glass: Is the Bar Committee giving its imprimatur to a lawyerby admitting him?

• Isn’t there a claim of meeting minimum standards, including characterand intelligence?

• Should we protect the public from him, or the public’s trust in lawyersfrom his damaging it?

• In re Mustafa: Immediate admission was denied for the financial chi-canery, but it was a “wait a year” scenario.

• And what about a racist (but First-Amendment protected) person likeMatthew Hale?

10.2 Transient Lawyers and Multijurisdictional Firms

• Leis v. Flynt : Per curiam opinion. A prominent lawyer representing LarryFlynt couldn’t get pro hac vice admission to the bar in Ohio.

– The judge didn’t give a justification, he just denied the admission.

– The Supreme Court ruled that there was no constitutional propertyright in the expectation of pro hac vice admission. Nothing that theConstitution protects was taken from anybody.

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– Stevens, in dissent, disagreed, saying that things the Constitutionprotects have been violated. Ohio routinely granted consent, andbesides, lawyers crossing state borders have been instrumental inprotecting Constitutional rights (which leads to the expectation ofpro hac vice admission).

• Practically, though, Leis notwithstanding, admission is rampant–theremight be a requirement of local counsel to assist, at best. So Leis ispractically, if not doctrinally, dead.

• Birbrower : Modern UPL/crossing state lines issues. Arbitrators, negotia-tors, &c. don’t get pro hac vice admission. Birbrower couldn’t get feesfor the work it had done in California, because it was a New York firm.

• Rule 5.5(c): A lawyer can travel temporarily out of a state to practice ina host state if it meets one of four safe harbors.

• Added to undo the effect of Birbrower. But how far does it go?

• “Local Office, National Practice”: Rule 5.5(c)(1) is expensive–get a locallawyer who’s actively involved.

• Rule 5.5(c)(3) deals with ADR that is born out of a lawyer’s home juris-diction. That doesn’t apply.

• Rule 5.5(c)(4) handles “reasonably related to a lawyer’s practice in a ju-risdiction the lawyer is licensed to practice in.” But what if she doesn’thave any clients in her home state? And what if so much of your work isin a place that it’s not really “temporary” any more?

• The contradiction: As long as you’re licensed to practice where you’resitting, you can discuss the law of any place.

• What about the phone or email? Where are you when you do that?

• Jill could get a choice-of-law clause, to undo the “point of conenction”issue; but the state law she wants to be authorized might not be best asfar as the interests of client or employer.

• This is arguably irrational, but are there justifications?

• Local rules and law are different. Even contracts get judged by local laws.

• There is no authority to control an out-of-state lawyer.

• What about confidence that the lawyer will be familiar with the localities?Well, most law schools don’t train in local law anyway.

• Many states have a version of Rule 8.5, which is a “long-arm statute” fordisciplinary proceedings.

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10.3 Unauthorized Practice of Law

• Professional Adjusters v. Tandon: The adjusters might know the law ofinsurance better than the lawyers, and they’re licensed, too. But the judgesays “they were practicing law and they can’t do that.”

• Who negotiates for the insurance company, though? Adjusters.

• The adjusters lost this one because lawyers’ economic base was threatened,really.

11 Remedies for Professional Failure

11.1 Malpractice

• “When Sally Left Harry”: The “what about property gained during themarriage” factor was an open question, but in the intervening years, thesupreme court and then the legislature fixed things.

• Is there a claim against the lawyer? If he’d brought up the possibility, itcould have been settlement liability.

• And Sally probably had a right to know about the factors.

• The underlying could be that he violated his duty to give her informationshe needed.

• Not to mention, he arguably had an interest in not challenging the exactcase he won on. Of course, that’s a factual inquiry.

• If a lawfirm is a traditional partnership, every partner is liable–hence,most are LLPs, where you can’t go after other partners’ personal assets.

• But what about the Togstad factor, of what you say when you say you’renot interested?

– Miller said, for reasons we don’t know, “you don’t have a case,” anddidn’t mention the statute of limitations. It ran out. But “we’re notinterested” wouldn’t have had a problem.

– So, say “we are not interested, not based on the merits.”

• One issue: it’s hard to prove malpractice, because you have to show thatyou would have won against the original defendant. The lawyer is in theoriginal defendant’s shoes.

• Time goes by, this is hard to prove, and you can’t show that a settlementwould have occurred.

• Smith and Hendry were a boon to plaintiffs’ lawyers.

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• The Scope of the Rules says that a violation was not a basis for civilliability. But at the same time, a violation of the rules can be evidence ofa breach of the standard of care.

• Smith allowed an expert to testify about the conflict rules, and to testifythat in his opinion the firm was conflicted.

• Hendry said that since disloyal agents forfeit a fee, and lawyers are agents,there is no need to show damage, just the breach.

• Adkins v. Dixon: Criminal defense lawyer screws up, and defendant isconvicted and it’s affirmed. How do we recognize this claim?

• Normally, the solution isn’t to make the lawyer pay for the time in prison:the Texas case is an outlier.

• The dissenting chief judge in Peeler points out that if the lawyer had donehis job, Pelere would have never been convicted. Legally, she is innocent.(But that’s a dissent.)

• Viner v. Sweet : Lawyer screwed up by the numbers.

– Two possible liability arguments: “Show but-for cause” versus “showsubstantial cause.”

– The liability prong can be proven by another attorney as an expert,and/or proving that there wouldn’t have been a better deal, but nodeal.

– You’re more likely to win on substantial cause, but if you win onbut-for, you won’t get screwed by the appellate court if they decidebut-for is the standard.

– Could you ask for a special verdict? Maybe.

– What about the court giving the Viners a chance to make their caseunder the higher standard?

• “Memorandum from the Chief Judge”: Damages issues. Is the lawyer onthe hook for punitive damages he didn’t tell the client about or fight for?What about punitive damages he didn’t get reduced?

• No cases have found any distinction between those fact patterns. . . andthey usually don’t hold the lawyer liable.

• What about contingency fees? If you would have gotten $3m, but you’dhave given the lawyer (whom you’re suing) a third, do you get $2m fromhim? What about paying the new lawyer the same third?

• New York gives no credit. Other courts disagree.

• Generally, when you have to hire a lawyer to sue another lawyer, you can’tget attorney’s fees for the new lawyer. Except in New Jersey, or whenyou’re suing the lawyer both for damages and to undo another screwup.

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11.2 Women in the Law: Deborah Rhode

• Why didn’t Wolf Block settle? Pride? The hit to their reputation if theydid? Wanting a reputation for not being easy to extort? Already been hitand what do they have to lose?

• But they could have settled–who are their audiences? Clients, futureassociates?

• Who won that suit? Ezold seemed satisfied, Wolf Block vindicated–atleast some partners.

• Future Wolf Block female associates made partner, as “Ezold partners.”

• And then we have allegedly cruel statements like at SullCrom.

• And finally, what about staffing issues? Associate gets yanked off of a casebecause he or she will not be good long-term for the case (race, ethnicity,sex)? Would it be better to have different initial staffing?

11.3 Liability to Third Parties

• There was a time that this idea was insane. But 50 years ago, thatchanged.

• California: “Privity is not a complete defense. Sometimes, the commonlaw will justify holding lawyers liable to third parties for their conduct,even if it falls short of intentional wrongdoing.

• New York was among the last state to follow CA’s example.

• Petrillo is the extreme edge: claiming that Herrigal created an opportunityfor confusion by giving Bachenberg only two sheets with a misleading 2 of7 passes, instead of 2 of 30; a disclaimer would have solved that.

• Negligent misrepresentation–making a negligent statement which the lis-tener had a right to rely on–is the most common case.

• Herrigal “controlled the risk that the composite report would mislead thepurchaser.” He was in the picture continuously, and could have spoken upat any point.

• Slotkin: You don’t have to have bad faith, either. (This was in the privityera, so the judge said it was an issue of facts, but nowadays it would benegligent misrepresentation.)

• “My Client Tells Me”: The magic words.

• Law firms are also ultra-rational actors–they might likely settle if theydon’t get SJ, because they don’t want the publicity.

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• “Death, Taxes, and Liability?”: “We calculated all estate taxes.”

• Insurance company sues when they’re wrong. Claim: “We spoke as bestwe could.” No dice.

• What would be better? Telling the client to send the returns, or saying“we advised our client to pay all taxes he was aware of,” maybe.

12 Lay Participation

• This is structural–deals with how the business of legal advice is boughtand sold.

• The last third of the 20th century saw six big changes to this structure:

1. The USSC forbade a state from denying an out-of-state resident fromtaking the state bar. (Constitutional right to take the NH bar.) Simi-larly, rules granting residents but not nonresidents motion admission.(And duration requirements, which were scrapped in the early ’70s.)

2. Federal preemption of state bar authority–the states cannot bar some-one who is federally authorized to give legal advice from doing so.(There could be a national bar! There won’t though.)

3. A state cannot stop a person from giving legal advice via publication.

4. UPL issues, such as Quicken Family Lawyer; likewise, minimum feeschedules getting struck down as price-fixing.

5. Striking down of anti-advertising and anti-solicitation rules (exceptsome circumstances like the 30-day cooling-off period); representativeof the change of reasoning as lawsuits as a necessary evil to sometimesjust necessary.

6. And the children of Button.

12.1 Non-Profit

• NAACP v. Button is fundamental to the public interest nonprofit lawfirm. It and the three union cases that followed.

– Virginia threw up roadblocks to the enforcement of the desegregation-of-schools right. It made it harder for people to bring claims.

– They were watered down to very little (no intermediaries to go outand find plaintiffs) when it got to the USSC, but the USSC’s rulingwas broader.

– The Button opinion is not clear, but the holding is.

– “When it comes to using courts for the vindication of constitutionalrights, the First Amendment protects organizations like the NAACPand allows them to employ lawyers, despite not being a law firm, andto recruit through solicitation. The First Amendment is a shield.”

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– The State’s argument that it was worried about the corruptive influ-ence of non-lawyers was overruled.

– Harlan, in dissent, said that if the states are allowed to be concernedabout economic motives, why not political ones? Since worse hasbeen done for politics than for economics.

• The anti-solicitation rules and prohibitions against lay participation, thoughfully constitutionally defensible in for-profit law firms, do not apply topublic interest firms.

• Many years later, Edna Smith (later Primus) violated the South Car-olina anti-solicitation rule while working for the ACLU, and won on thesegrounds, even though she wasn’t a staff lawyer.

• The line between for-profit and not-for-profit is not clear. If a firm is onlya fee-shifting/contingency firm, it might consider itself not-for-profit.

• Cooperating lawyers work with public interest firms on a fee-shifting basis,and the Courts and ABA agree that that still can justify a not-for-profitbasis.

• The union cases: the bar associations showed their true colors.

• Deals with private firms: referral in exchange for limited percentage fees.In one case, they hired a lawyer on salary.

• Justice Black wrote three times to strike down challenges to those.

• “The state bar thinks they have a right to charge exorbitant fees and pre-vent unions from identifying competent lawyers.” He got more sarcastic.

• The claim that this wasn’t constitutional rights? No matter–it was stillpetitioning the court.

• It wasn’t federal, but state? No matter–still petitioning the court.

• “The common thread. . . is that collective activity undertaken to obtainmeaningful access to the courts is a fundamental right within the protec-tion of the First Amendment.”

12.2 For-Profit

• For-profit is different. Only in DC can nonlawyers be equity partners inlaw firms. As long as the firm is purely a law firm, and the lawyers aren’tdirected by nonlawyers.

• There is an interest in having lobbyists or economists in DC firms, andthey want to be partners. Professional pride.

• No sharing legal fees with nonlawyers outside of DC, though, for multi-location firms.

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• Litigation-funding companies are getting into trouble for “champerty,” theFrench doctrine that investing in lawsuits “stirs up litigation,” which is anecessary evil.

• But these litigation companies aren’t encouraging the suits, just passivelyinvesting.

• Rancman, OH supreme court, didn’t consider the policy. If you have twoyears left in a suit, and you only have one asset–the suit itself–where canyou sell a piece? Not to your lawyer–a lawyer even lending car fare, ormedical expenses, or rent money, or even $100 is a problem–and not tothe outsiders.

• We created a single-buyer market, and that buyer–the defendant–won’tbuy piecemeal!

• Of course, you can get a loan, but that’s economically tricky.

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